If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.

"THIS" is the Big One: Chinese exporters shun flagging dollar

Rising numbers of Chinese exporters are shunning the US dollar or devising ways to offset the impact of the falling currency as they confront rising labour and raw material costs at home.

According to Alibaba.com, the online company that matches Chinese suppliers with international buyers, the vast majority of their almost 700,000 Chinese suppliers no longer use dollars to settle non-US transactions to minimise foreign exchange risk.

“They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi,” David Wei, chief executive, told the Financial Times. Moreover, he added, prices quoted in dollars were now often valid for just seven days compared with the 30-60 days common previously.

The dollar has long been the currency of choice for Chinese and other exporters around the world. However, the impact of its recent weakening has led exporters to begin questioning its place as the de facto world currency.

The renminbi, which western governments have long alleged is undervalued, thus giving Chinese exporters an unfair advantage, has appreciated 6.7 per cent against the US dollar in the past six months. Economists expect it to rise 10-15 per cent against the dollar in 2008.

Quanzhou Leething Garment & Knitting, a Chinese men’s underwear factory, said it had started encouraging clients to pay in euros instead of dollars in November. While the Chinese currency has appreciated against its US counterpart in recent months, it has moved little against the euro.

Other companies have taken more unusual approaches, such as setting their own exchange rates and therefore in effect raising prices.

Xiao Zheng, chairman of Dongguan City Shima Toys in southern China, said its price quotations were valid for three months but were calculated based on an exchange rate of Rmb6.6 to the dollar.

With the official exchange rate at Rmb7.01 to the dollar on Thursday, this in effect raised prices 5.8 per cent.

“We are thinking about renewing our quotations every other month and we are also going to offer quotations in euros very soon,” said Mr Xiao.

William Fung, managing director of Li & Fung, a global supply chain company, said international buyers would have to accept higher export prices from China, especially for goods such as toys that are largely made only in the country.

NOTICE: Timebomb2000 is an Internet forum for discussion of world events and personal disaster preparation. Membership is by request only. The opinions posted do not necessarily represent those of TB2K Incorporated (the owner of this website), the staff or site host. Responsibility for the content of all posts rests solely with the Member making them. Neither TB2K Inc, the Staff nor the site host shall be liable for any content.

All original member content posted on this forum becomes the property of TB2K Inc. for archival and display purposes on the Timebomb2000 website venue. Said content may be removed or edited at staff discretion. The original authors retain all rights to their material outside of the Timebomb2000.com website venue. Publication of any original material from Timebomb2000.com on other websites or venues without permission from TB2K Inc. or the original author is expressly forbidden.

"Timebomb2000", "TB2K" and "Watching the World Tick Away" are Service Mark℠ TB2K, Inc. All Rights Reserved.